e-fundresearch: Mr Simon Pickard, you are the fund manager of Carmignac Emergents fund (ISIN: FR0010149302). Since when are your responsible for the fund management?
Pickard: I have been managing Carmignac Emergents since September 30th 2008. This is not my first experience at Carmignac. Indeed I already worked here as a portfolio manager on European equities between 2000 and 2005.
e-fundresearch: Which benchmark do you adhere to?
Pickard: The fund aims to achieve maximum performance through an active and non-benchmarked management approach. The general investment philosophy is driven by our fundamental macroeconomic analysis and the research from our analysts. Thus the securities in the portfolio are usually significantly different from the performance index.
e-fundresearch: Are you also responsible for other funds at the moment?
Pickard: I’m currently co-managing two other funds, Carmignac Emerging Discovery with Xavier Hovasse and Carmignac Emerging Patrimoine with Charles Zerah since its launch in March 2011. Carmignac Emerging Discovery focuses on small and medium capitalisations of emerging countries. This universe is quite rich in companies linked to our core theme, the improvement in the standards of living in emerging markets. On the other side, Carmignac Emerging Patrimoine is a diversified fund invested in all emerging markets. The Fund aims to capitalise on the world’s strongest growth regions by benefitting from its equity, bond and currency performance drivers.
e-fundresearch: What is the total volume that you manage in all your funds?
Pickard: As of March 31st 2012 I manage 2,983.56 million euros. This figure is decomposed as follow: 2033.09 million for Carmignac Emergents, 669.27 million for Carmignac Emerging Patrimoine and 281.20 million for Carmignac Emerging Discovery.
e-fundresearch: Regarding the performance: which performance did you achieve since the beginning of the year and in the years 2007-2011? Absolutely and relatively to the relevant benchmark?
Pickard: The fund has a year-to-date, as of March 31st 2012, positive performance of +12.83% while its performance index is up +10.78%. From 2007 to 2011 the fund has outperformed its performance index with a +5.04% increase against +2.00%. The funds succeed to erase its losses from the 2008-2009 financial crisis and is showing both absolute and relative performances.
e-fundresearch: How content are you with your own performance in the last years and this year?
Pickard: As mention in the previous question, the fund performance is up by 12.83% since December 31st 2011. By profiting of the rally began at the end of 2011 we were able to undo the fall of equities markets after the contagion of the European debt crisis.
e-fundresearch: How are you able to deliver added value for your investors with your performance?
Pickard: Despite short term concerns, we are long term believers in Emerging markets. Thanks to their growing businesses, their strong balance sheets and their attractive valuation, emerging markets should once again show their resilience in a context of global economic slowdown. Through a rigorous stock selection and our field expertise we seek to profit from those long term trends.
e-fundresearch: How long have you been a fund manager already?
Pickard: I have been working as a portfolio manager for 16 years, nearly half at Carmignac.
e-fundresearch: What kind of capital market situation do we have at the moment? How do you act in this environment?
Pickard: In 2011, over the first nine months of the year our reading of the global macro-economy legitimised our underexposure to equity risk, especially European equities. It also made it possible to reduce the Fund’s volatility by completely preventing it from feeling the effects of August’s bearish panic. It is right that this positioning turned to be a little too defensive during the fourth quarter with respect to the equity market: the American economy’s good health has pushed the European crisis into the background and fought off the risk of contagion. But on the year as a whole, this caution approach on the macro-economic scenario, alongside with the flexibility our of investment process allowed us to deliver significant outperformance.
e-fundresearch: What are the special challenges in this environment?
Pickard: Going into 2012, the improved visibility available on both American activity and the absorption of inflationary pressures in the emerging universe leads to increase in the portfolio’s exposure to equities. We must, however, still manage the risks that the European recession will bring to bear on global activity by cautious but flexible allocation.
e-fundresearch: What objectives do you have till the end of the year and in the mid term for the upcoming 3 to 5 years?
Pickard: The sustainability of the rally in Emerging Markets will depend on several factors. First, the situation in developed markets. Economic realities vary between the major regions. Even if emerging markets clearly outperform over the long term, in the short term, in case of strong crisis in developed countries, the risk of a contagion to Emerging countries can’t be denied. Another question mark is on China. I just came back from a trip around China and it looks like China faces a real slowdown of its economy. Nevertheless, we are waiting to see next few months’ figures to confirm the soft landing. In India, even if the long term story is still attractive, there are still political and economic problems which can penalize the equity market. From a general perspective emerging countries are now benefiting from healthy public finance as conversely, the financial situation has deteriorated in developed countries. Indeed, Emerging countries benefit from the process started after the clean-up of Emerging markets balance sheets at the end of 90’s. Moreover, Emerging countries record a growth three times stronger than developed countries. These good macroeconomic fundamentals are furthermore coupled with attractive valuations. In this context, valuation catch-up is likely to continue and to become more pronounced. In this context, our investment strategy aims at seizing upside opportunity offered by today’s markets, while of course maintaining a very active risk management. So, we would consider an eventual market slowdown as a buying opportunity.
e-fundresearch: Thank you for the interview!